President's Message June 2019

Trade, the lubricant of civilisation

The earliest form of trade was bartering.  Exchanging something we own, make or can easily obtain, for something we cannot make or is made from materials we cannot obtain.  At first this was between tribal members and then between adjoining tribes. As each tribe bartered with neighbours, the chain of bartering grew longer and longer.  Archaeological digs show many cases when goods from remote areas are found amongst ancient burial sites.

With the exchange of goods would have come the exchange of knowledge and more and more sophistication ways of living (and unfortunately warfare).  This has been going on for thousands of years.  The Phoenicians (from the Levant) traded with many nations through sea routes (Britain for tin) but also had extensive trade networks through Turkey, Persia and Mesopotamia.

We recognise the most famous trade route through Eurasia as the Silk Road because the Chinese Han Dynasty officially opened and documented trade with the West in 130 B.C.  Because silk was entrancing and highly desirable the trade flourished.  One of the main reasons was that the Chinese Emperor Wu wanted free access to the “Heavenly Horses” of Fergana in Uzbekistan.  These were bigger and stronger than the existing Chinese horses and were superior in warfare. These horses were also valued by the Persians in the West so the trading had been going on for centuries or millenniums before this.

(As an interesting aside, after the Ottomans in 1405  closed the Silk road through Turkey to the West, trade with Russia flourished and in the 17th Century the Russians had a monopoly of rhubarb considered essential to keep the British healthy and regular.)

Although money and the exchange of goods for gold was well established by then there was still the physical transfer of goods across the miles of the trade routes.  A more sophisticated method of trade was enabled by the Dutch invention of the limited liability company and the establishment of sea routes around the world.  Basically we value trade as the exchange of physical goods.

Arbitrage was an advance in earning money through trade.  It is the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.  This can mean small profits per item with large volumes and any actual exchange of goods taking place either at a distance or close by.  It can avoid trade sanctions between the countries in which the principles reside.

Current arbitrage can mean the electronic buying and selling of stocks or futures in split second trading.  Of course stocks and futures do have goods at the end of a long chain but it can be very difficult to unravel the links

Somehow trade as the exchange of physical goods seems morally more correct than arbitrage.

Today the re-emergence of the Central Asian states (the “Stans”) aided by China will change the trade and civilisations of all parties involved and the far west as well.  Sea routes will still dominate trade because of the ability to transfer vast amounts of physical goods much cheaper than land routes.  As the ice melts and ships can traverse the other half of the world via Antarctica relationships between nations and civilisation will continue to change, grow and shape our world views.

As always.

.Jocelyn  Head

President, U3A Clarence


Extracts from The Golden Road to Samarkand by James Elroy Flecker

We are the Pilgrims, master; we shall go
Always a little further; it may be
Beyond that last blue mountain barred with snow
Across that angry or that glimmering sea,

White on a throne or guarded in a cave
There lies a prophet who can understand
Why men were born: but surely we are brave,
Who take the Golden Road to Samarkand.

Sweet to ride forth at evening from the wells
When shadows pass gigantic on the sand,
And softly through the silence beat the bells
Along the Golden Road to Samarkand.

We travel not for trafficking alone;
By hotter winds our fiery hearts are fanned:
For lust of knowing what should not be known,
We take the Golden Road to Samarkand.